Self-Regulatory Organizations; Notice of Filing of Amendment No. 2 to Proposed Rule Change by the New York Stock Exchange, Inc. To Amend Its Rule 500 Relating to Voluntary Delistings by Listed Companies

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40688; File No. SR-NYSE-97-31]

Self-Regulatory Organizations; Notice of Filing of Amendment No.

2 to Proposed Rule Change by the New York Stock Exchange, Inc. To Amend

Its Rule 500 Relating to Voluntary Delistings by Listed Companies

November 18, 1998.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that

on November 9, 1998, the New York Stock Exchange (``NYSE'' or

``Exchange'') filed with the Securities and Exchange Commission

(``SEC'' or ``Commission'') Amendment No. 2 to the proposed rule change

as describe in Items I, II and III below, which Items have been

prepared by the NYSE. The Commission is publishing this notice to

solicit comments on Amendment No. 2 from interested persons.

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\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

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I. Self-Regulatory Organization's Statement of the Terms of

Substance of the Proposed Rule Change

The Exchange is proposing the second amendment to its proposed rule

change to replace existing NYSE Rule 500 with a new Rule 500 to revise

the procedures a NYSE-listed company must follow to delist its

securities from the Exchange. The test of Amendment No. 2 to the

proposed rule change is available at the Office of the Secretary, the

NYSE, and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the NYSE included statements

concerning the purpose of and basis for the proposed rule change and

discussed any comments it received on the proposed rule change. The

text of these statements may be examined at the places specified in

Item IV below. The NYSE has prepared summaries, set forth in Sections

A, B, and C below, of the most significant aspects of such statements.

[[Page 65627]]

A. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

1. Purpose

On November 17, 1997, the Exchange submitted the proposed rule

change, proposing to amend NYSE Rule 500, which states the procedures a

NYSE-listed company must follow before voluntarily delisting its

securities from the Exchange. On December 3, 1997, the Exchange

submitted Amendment No. 1 to the proposed rule change to the

Commission. The amended proposal was published for comment in the

Federal Register on December 10, 1997.\3\

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\3\ Securities Exchange Act Release No. 39394 (December 3, 1997)

62 FR 65116.

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NYSE Rule 500 currently requires holders of 66 percent of a

security to approve a company's decision to delist the company's

securities from the Exchange, with less than ten percent of the

individual holders objecting to the delisting. As originally proposed,

the amended rule would have permitted a domestic issuer to delist stock

if it obtained the approval of: (1) A majority of the company's full

board of directors; and (2) the company's audit committee. The issuer

then would have been required to provide shareholders with between 45

and 60 calendar days' notice of the delisting. A non-U.S. issuer would

have had to obtain board approval to delist its stock. A non-U.S.

issuer also would have had to provide holders with reasonable notice of

its intention to delist, which would have required the issuer to send

written notice to U.S. holders and to follow home-country practice to

provide notice to non-U.S. holders.

In response to the Commission's request for comment on the original

proposal, the Commission received a number of comments both for and

against the proposal. In response to those comments and discussions

with Commission staff, the Exchange now proposes the following

amendments to the original proposal:

Permit approval by a company's board of directors

according to applicable state law requirements on majority votes

(generally the majority of a quorum), rather than requiring approval by

a majority of the entire board. The Exchange would continue to require

audit committee approval.

Amend the notice provision to require U.S. companies to

provide actual written notice to no less than 35 of their largest

record holders (rather than all holders). A foreign issuer would have

to provide such notice to its 35 largest U.S. shareholders.

Require both U.S. and foreign companies to issue a press

release to inform shareholders generally of the proposed delisting.

Shorten the minimum waiting period from 45 calendar days

to 20 business days, and change the maximum waiting period from 60

calendar days to 60 business days, with the ability of companies to

extend the period, subject to approval by the Exchange.

The Exchange believes that new Rule 500, as proposed to be amended,

will continue to provide investors with adequate procedural protections

in the delisting process while providing listed companies with greater

flexibility in this area.

2. Statutory Basis

The Exchange believes Amendment No. 2 to the proposed rule change

is consistent with the requirements of section 6(b)(5) of the Act,\4\

which requires that the rules of the Exchange be designed to prevent

fraudulent and manipulative acts and practices, to promote just and

equitable principles of trade, and, in general, to protect investors

and the public interest.

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\4\ 15 U.S.C. 78f(b)(5).

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B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange believes that the proposal does not impose any burden

on competition that is not necessary or appropriate in furtherance of

the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed

Rule Change Received From Members, Participants or Others

In adopting the original proposal to amend Rule 500, the Exchange

consulted with numerous Board and advisory committees, pension funds

and other Exchange constituents. The Exchange also has informally

discussed the current proposals with various of these constituencies.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within 35 days of the date of publication of this notice in the

Federal Register or within such longer period (i) as the Commission may

designate up to 90 days of such date if it finds such longer period to

be appropriate and publishes its reasons for so finding or (ii) as to

which the self-regulatory organization consents, the Commission will:

(A) By order approve the proposed rule change, or

(B) Institute proceedings to determine whether the proposed rule

change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning Amendment No. 2, including whether Amendment No. 2

is consistent with the Act. Persons making written submissions should

file six copies thereof with the Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW, Washington, DC 20549. Copies of the

submission, all subsequent amendments, all written statements with

respect to the proposed rule change that are filed with the Commission

and all written communications relating to the proposed rule change

between the Commission and any person, other than those that may be

withheld from the public in accordance with the provisions of 5 U.S.C.

552, will be available for inspection and copying at the Commission's

Public Reference Section, 450 Fifth Street, NW, Washington, DC 20549.

Copies of such filing will also be available for inspection and copying

at the principal office of the NYSE. All submissions should refer to

File No. SR-NYSE-97-31 and should be submitted by December 18, 1998.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\5\

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\5\ 17 CFR 200.30-3(a)(12).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98-31582 Filed 11-25-98; 8:45 am]

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